Business Relationship Between Str Alliance and Y&R - Assignment Example

1) In wht wys does the Str llince ct s globl Building strong relationships with s can help reduce turnover rates, and thereby increase profitability (Reichheld and Sasser, 2000) due, in part, to the fact that retaining customers is significantly less costly than acquiring new customers. The financial investment of building and maintaining close customer relationships is a major reason that a growing portion of companies' marketing efforts are being devoted to relationship management (Liswood, 2002). Estblished in 1997, Str llince hs become the first truly globl irline llince to offer customers globl rech nd smooth trvel experience; it is the company that managed to build strong relationships with its customers during short periods of time and reach big world recognition. Due to its huge success in beoming the leding irline llince in the globl vition business, the compny hs been voted Best irline llince by Skytrx in 2003 nd 2005. From its erly beginnings in 1997 with five founding irlines, 14 member irlines now come under the Str llince fold: ir Cnd, ir New Zelnd, N, ustrin irlines, bmi british midlnd, Lud ir, Lufthns, Mexicn, SS Scndinvin irlines, Singpore irlines, Thi irwys Interntionl, Tyrolen irwys, United irlines nd VRIG. Tody Str llince ircrft tkes off or lnds every four seconds to one of 729 irports in 124 countries, providing customers with truly globl rech. Focusing on customer priorities, Str llince irlines hve concentrted on hrmonising timetbles to reduce trnsfer times t irports nd offer semless worldwide trvel. In addition to reducing customer turnover, important reason supporting the importance of customer satisfaction is the belief that a satisfied customer base is likely to be a firm's single greatest source of sustainable competitive advantage (Sriram et al., 1992). This implies that a loyal customer base is an asset composed of the discounted present value of the future stream of profits from a continuing relationship. Str llince hs lso responded to the customer's need for recognition by linking ll irline frequent flyer progrmmes thus llowing pssengers to ccrue nd redeem milege cross the network. To celebrte the 5th nniversry Str llince hs lunched promotion llowing members of the irline loylty progrmme to ern up to 55,555 bonus miles by flying five different Str llince crriers. Whilst trvelling round the world, Str llince customers hve ccess to more thn 500 irport lounges offering quiet escpe from the bustle of busy interntionl irports. Included in this list is dedicted Str llince lounge in Zurich, which hs been rted by the industry s mong the ten best in the world. t mny of the irports served, Str llince irlines hve moved their fcilities into the sme terminl to mke trnsfers quicker nd more convenient for pssengers. mjor brek through ws chieved in 2000 for Str llince with the lunch of StrNet, linking ll the irline computer networks together enbling the swift nd esy exchnge of informtion. This rel time ccess llows quick nd esy response to pssenger requests gin chieving smooth trvel experience. further notble dvnce in the IT sector is the introduction of mobile services vi the Str llince website. Customers cn ccess the thousnds of connections being offered by the member irlines nd cn no downlod the timetble either to their computers or plm held devices. More thn 10,000 visitors log onto the Str llince website dily. cting successfully on the world ren nd in the irline mrket, Str llince becme the best globl customer due its excellent brnd promotion nd dvertisement cmpign. The company followed brand communication strategy in order to reach its goals of successful communicator on a world arena. In its communication strategy, Star Alliance used techniques of marketing communication strategy when using cognitive response to marketing interventions. The company used collective mental processes (memory, language, consciousness) of the theory in order "to combine information into knowledge structures for decision-making" (Blythe, 2000) In the erly 1997, Str llince ws dvertised by interntionl dvertising group Young&Rubicm, which worked with mny globl ccounts nd customers. Following the gols of the compny, dvertising gency imed to 1) crete nd mintin high level of wreness of the Str llince brnd with its defined trget udience of frequent interntionl trvelers; 2) inform this trget udience of the Str llince products, services, benefits nd new prtners; 3) encourge this defined trget udience to fly Str llince prtners nd 4) insure high qulity visibility if the Str llince brnd in key mrkets nd res. To rech these ims, Y&R built the structure of Strt llince so tht it mirrored its client's needs. When learning agency's strategy of brand building it can be said that it followed the theory of effective brand building expressed by Ehrenberg, who suggested that "a brand is more than a merely functional product - there are other values to be considered: for example, a product is made in a factory; a brand is bought by a customer; products can be copied by competitors, whereas a brand is unique" (p. 21). To reach that goal, Str llince decided to use services of other companied but the Y&R's. MCC gency ws the point of contct for Str llince. The unnimous system of voting ment tht the MCC nd its gencies hd to listen nd tke ccount of fourteen opinions on every subject, from Str llince's corporte colour to design nd dvertising copy. Jn lbrecht, Chief Executive Officer of the llince sid: "Str llince is diversity of cultures working together to crete unique trvel experience. Ech of our member crriers enjoys helthy position in its home mrket nd through our members we hve strong presence t mjor hubs round the world. lso, customer reserch hs confirmed there is high consumer wreness ttched to the Str llince brnd. "We re number one in the llince business. We re going to mintin this position, living up to our vision tht Str llince is to be the leding globl irline llince for the frequent interntionl trveller." 2) In wht wys do Y&R compnies ct s globl suppliers Marketing strategy is the plan that marketers use to guide their efforts to provide particular products to specified market segments through exchanges. Communication strategy is the plan developed and used by marketing communication managers to provide the necessary communication environment for such exchanges to become possible and to be consummated. It should be noted that these objectives and even the concept of communication are in most marketing practice defined outside the social system to which they are targeted. That is, both the definition of the problem (i.e. customer satisfaction) and the communication solution are defined by providers but not consumers and buyers. (Duncan, Moriarty, 2001) In serving Str llince s globl supplier, Y&R mde ll necessry efforts to keep communiction between the compny nd customers open nd effective for two prts. This ws done in number of wys. First, the gencies mde their internl structures reflective to the needs of clients. Since Str llince ws globl customer, Y&R nd Wundermn cquired for globl ccount mngement structure. Crl Hrtmn ws rendered responsibility for the Str llince ccount in New York, while Dvid Butter nd Sylvi Torrisi mnged Wundermn. Secondly, strong support tem ws set due to Str llince incredibly demnding ccount from the resourcing point of view. People who worked on Str llince hd to devote their full time to work nd deliver high qulity of work. This in turns provided chllenges in terms of fulfilling their other responsibilities on other projects, which ws the norm in n gency environment. People cquired for the project were those ble to work 24 hours per dy, 7 dys per week. Holding regulr conferences entiled people to sty in offices until midnight nd foreign meetings oftentimes ment tht people trveled in their time off. Third, to ensure constntly open communiction with their clients (on of the most important issues of doing business that lead to success and positive feedback (Ehling, White and Grunig, 2002)) , Y&R creted bi-nnul client stisfction survey through third prty compny, to rte the gency on eight criteri tht delt with building client reltionship. This study ws good in terms in setting even closer connection with customers nd primry defining their needs (stisfction/disstisfction in Str llince services). Prticulrly, the survey llowed: To define current client stisfction levels; To evlute the levels of vlue nd loylty tht the gency provided; To benchmrk Y&R's performnce cross clients nd yer on yer. Results of the study were presented to employees of Y&R s well s to clients of the compny. Generl client stisfction score ws reched by dividing client rtings on eight key criteri ctegories: 1) innovtion nd cretivity; 2) strtegic contribution; 3) medi services; 3) professionlism nd qulity of personnel; 5) mintining reltionships; 6) dministrtive performnce; 7) business vlue; 8) delivery nd execution. Quoted from Hrtmn, mnger t New York deprtment, "Y&R" rted extremely well on the reltionship, strtegic contribution, qulity of personnel, medi services, nd dministrtive performnce". Clients needs were bsiclly mde of three points: better business vlue, cretivity, delivery nd execution. Overll, execution of these points ws importnt to Y&R s it ws the wy to stisfction of client's needs nd therefore the reflection of compny's good performnce. In ddition, Y&R ws noted s thoughtful, relevnt nd holistic compny in reference to Str llince servicing. Its cretive product reflected the combined strength of the tem nd the process to delivering fresh cretive ides. The Y&R's tems ws mrked s tlented, cring nd likeble, nd the reltionship benefited from the tem's good listening skills. However, some members felt tht the turnover of Y&R senior nd junior stff ws disdvntgeous to the mngement of the Str llince. 3) How hs the Str llince - Y&R reltionship evolved over time Is it ws lredy mentioned, in erly 1997 Str llince strted its coopertion with Y&R in New York. t tht time, Y&R hd n ongoing reltionship with the two irlines nd due to the proposition of United dvertising cmpign of five founding members ws lunched. These compnies were the following: ir Cnd, Lufthns, Thi irwys Interntionl, nd SS Scndinvin irlines System, nd United. Other compnies joined to the llince but Y&R ws on top. In the beginning of dvertising cmpign, Str llince set gols for Y&R nd fixed the dedlines. During first two months Y&R hd to lunch n ide into the mrket which ws big chllenge for the gency. In order to do so, Y&R employed its best people nd mobilized its network within nd cross compnies. Str llince ws not the biggest ccount of the gency; however, it hd strtegic merits nd ws worth putting highest efforts on building up the brnd of the compny. Lter Str llince formed mrketing nd communictions committee (MCC) to work with Y&R. The gols of the compny were to build the brnd of Str llince nd to forwrd it into interntionl mrket. More specificlly the gols of MCC were mrked in bove (see Q 1) Effective MCC structure ws creted to follow its gols. Ech member hd one vote regrdless of size, nd the committee dopted unnimous pproch to reching decisions. Y&R ws in fvor of Str llince's unnimous voting structure. The gency believed tht mjority voting would hve led to cliques, in fighting nd defections, which would hve been determined to the llince. Y&R cultivted the socil fbric of the MCC by orgnizing compny-sponsored events, such s brbeque in Thilnd sponsored by Time Mgzine, nd tour of Mexico's biggest newspper, L Reform. Y&R mobilized its globl force to deliver on Str llince's needs, though the ccount ws centrlly controlled from its hedqurters in New York. Working with Y&R ment Str llince hd ccess to the tlent nd expertise from its 539 offices in 80 countries, plus the wider netowirk of WPP, its prent compny from October 2000. S Str llince evolved from virtul to rel compny, registered under Germn lw s limited libility compny with 65 permnent stff t its world hedqurters in Frnkfurt, it stopped deling with Y&R New York. 4) Wht do Y&R compnies do well or bdly s globl suppliers Performing s globl supplier of Str llince's services, Y&R contributed gretly to the development of the compny while promoting its brnd nd cpturing leding positions on the mrket. Positive chnges mde by Y&R re discussed ll through this pper nd cn be shortly summrized in the following wy: 1) Y&R set internl structure of the compny so tht it corresponded to the needs of clients; 2) Y&R creted strong support tem tht were prepred to work literlly 24/7 to meet the needs of customers nd to benefit Str llince; 3) Y&R insured open communiction with their client while inititing bi-nnul client stisfction survey through third prty compny. 4) Y&R orgnized regulr event clled Brin Trust, where key stuff nd industry experts were invited to brinstorm on specific opportunities within n ccount or business. The ide ws to stimulte nd bring broder perspective to their clients. These nd mny other innovtions were brought into the gency to mke the performnce of Str llince more effective nd leding on the mrket. ll ssignments nd projects the compny tried to deliver with highest results, however, there were situtions tht Y&R hd difficulties to mnge. The biggest test Y&R fced s globl customer ws culture. The gency often hd to del with the diversity of culture which ment possible lck of prticiption of certin cultures nd delys with cmpign sign-offs becuse the cultures tht did not prticipte in the discussion hd some issues tht they wished to clrify. Culturl complexities mong the member irlines lso ment tht the implementtion process for projects tripled in delivery time: it took n verge of three months to get project pproved nd implemented, insted of the usul one month. It ws thus virtully impossible to tke dvntge of short term opportunities in the irline industry. 5) Wht chllenges should Y&R mke in servicing the Str llince ccount from a) the Str llince viewpoint - how to continue to build on Str llince's brnd with the new structure in plce - how to mnge the somewht insecure dynmic mong the member irlines; - how to led the mrketing process for gencies to follow nd implement b) The Y&R viewpoint - how to shpe new role in order to providfe the sme service to Str llince - with the depressed stt of the irline industry following the events of September 11, 2001, where mrketing budgets were cut drsticlly, how should Wundermn ensure tht their projects with Str llince continue, nd were not ffected by the irline industry. Bibliography: Blythe, J. (2000) Marketing Communications, London: FT Prentice-Hall. Ehrenberg, A. S. C. (2004) 'How do consumers come to buy a new brand', Admap, March, pp. 20-24. Duncan, T. and Moriarty, S. E. (2001) 'A communication-based marketing model for managing relationships', Journal of Marketing 62: 1-13 Ehling, W. P., White, J. and Grunig, J. E. (2002) 'Public relations and marketing practices', in Grunig (ed.) (1992), pp. 357-93. Reichheld, F.F. and W.E. Sasser, Jr. (2000). "Zero-Defections: Quality Comes to Services." Harvard Business Review (September-October): 105-111. Reitsperger, W.D. 1986. "Japanese Management: Coping with British Industrial Relations." Journal of Management Studies 23: 72-87. Liswood, L.A. (2002). "Once You've Got 'Em, Never Let 'Em Go." Sales and Marketing Management (November): 73-77. Sriram, V., R. Krapfel, and R. Spekman. 1992. "Antecedents to Buyer-Seller Collaboration: An Analysis From the Buyer's Perspective." Journal of Business Research 25: 303-320. Read More